Can I file bankruptcy on payday loan in Ohio?

Ohio residents sometimes find themselves in difficult financial circumstances.   In an attempt to maintain economic viability they may end up taking out one or more payday loans. However. they soon become embroiled in a never-ending cycle of high-interest rates, fees, and then borrowing money just to make minimum payments on these payday loans.

These borrowers may wonder if bankruptcy is a good option for them. In many cases, it can be, since most types of debt can be discharged in the bankruptcy.   However, some payday loan bankruptcies involve unique issues that good bankruptcy attorneys can avoid and address.

The first problem is that some payday lenders require borrowers to provide a signed, postdated check. The postdated check is insurance against the borrower failing to make a payment. However, some lenders will cash this check as soon as a borrower files for bankruptcy. This can create problems with the borrower’s bank account if the borrower is already short on cash.

The second issue common to payday loan creditors is the fact that, because of the cycle of indebtedness, many payday loans are taken out repeatedly over a period of time. In some cases, a person may have taken out or renewed one or more loans right before filing for bankruptcy.

When someone files for bankruptcy a creditor can object to the discharge of certain debts. The grounds for challenging a discharge vary, but some lenders try to argue that taking out a loan or using a credit card right before filing for bankruptcy is a form of fraud. While payday lenders are often not successful at making such a claim, because of the nature of their business which often involves borrowers taking out multiple short-term loans one right after another, it is a tactic that bankruptcy attorneys should be aware.

Ohio residents who are concerned about payday loans should not allow themselves to be intimidated by lenders. Talking with an experienced bankruptcy lawyer can provide peace of mind as well as a roadmap for a way out of debt. Being honest with the attorney about the nature of one’s debts allows the lawyer to protect his or her client’s interests and ensure that the bankruptcy plan moves forward.